DMR: Questions surround Hytera’s DMR future in U.S.

[Editor’s note: This story was updated on the morning of July 4 to include a response provided by Hytera Communications.]

China-based Hytera Communications’ ability to import and sell certain DMR equipment and software into the United States could be jeopardized later this year or early next year after U.S. International Trade Commission (ITC) administrative law judge today determined that Hytera has infringed on four Motorola Solutions patents.

“I have found that complainant Motorola Solutions has proven, by a preponderance of evidence, that respondents Hytera Communications, Hytera America, and Hytera Communications America have violated subsection (b) of Section 337 of the Tariff Act of 1930,” according to the determination from ITC Administrative Law Judge MaryJoan McNamara. “I have found that Hytera has not proven, by clear and convincing evidence, that any of the asserted claims of any of the identified patents are invalid.

“I have recommended that a Cease and Desist Order and a Limited Exclusion Order with a certification provision be issued against each of the Hytera respondents.”

In today’s determination, McNamara found that Hytera Communications infringed four Motorola Solutions’ patents and that Motorola Solutions met the legal requirement of showing a “technical domestic industry” on three of the four patents. McNamara recommended that ITC commissioners approve an order prohibiting Hytera importing and selling product that utilize Motorola Solutions’ U.S. Patents No. 7,369,869, 7,729,701 and 8,279,991.

Released this afternoon, McNamara’s opinion is the “final initial determination” for the investigation that has been conducted by the ITC since the case was filed in March 2017. Today was the scheduled deadline for McNamara to issue a determination, which ITC commissioners will consider before making a ruling—possibly one that mirrors McNamara’s recommendation to prohibit Hytera from importing or selling certain patent-infringing products in the U.S. as early as later this year.

Typically, the ITC commission makes its rulings within four months of an administrative law judge’s determination, with the ruling often becoming effective within a few days after the ruling is announced. However, the U.S. president—currently Trump—has up to 60 days to review the ITC commission’s ruling and potentially overturn it, if the president deems it to be in the public interest.

If Hytera is prohibited from importing and selling certain goods in the U.S., existing customers of the infringing Hytera products will not be asked to shut down their existing systems as a practical matter, according to multiple sources familiar with the situation. Whether these existing Hytera customers may encounter problems getting replacement parts or software upgrades to their systems likely would be determined by the details of any remedy included in the final ITC ruling, according to the sources.

Although Motorola Solutions initially filed its patent-infringement claims against Hytera Communications in U.S. district court, many industry observers have been especially interested in the case before the ITC, which tends to issue rulings and implement any remedies more quickly than a legal court.

Mark Hacker, Motorola Solutions’ general counsel and chief administrative officer, expressed support for McNamara’s determination.

“Judge McNamara’s ruling validates our allegations, upholds the integrity of our intellectual property and rebukes Hytera for its unscrupulous and unlawful behavior in willfully infringing Motorola Solutions’ patents,” Hacker said in a prepared statement. “While we consider the initial determination an important step, it is only one component of our global efforts to address Hytera’s systematic, brazen and egregious theft and infringement of our intellectual property.

“Motorola Solutions has a long and distinguished track record of innovation, with an extensive portfolio of approximately 5,000 patents. We are committed to vigorously defending our valuable intellectual property as we continue to drive innovation for our customers. We greatly appreciate the diligent work undertaken by Judge McNamara and the ITC staff during this investigation, and we are confident that the full ITC will uphold this decision and enter a final determination consistent with today’s findings.”

In a statement provided to IWCE’s Urgent Communications on Wednesday morning, Hytera Communications noted that McNamara’s determination found infringement on only four of the seven patents that were part the original Motorola Solutions complaint to the ITC last March. Hytera Communication said it would seek a reversal of McNamara’s determination, while noting that the company’s products currently can be sold in the U.S. pending further decisions and that new products developed by Hytera do not infringe on Motorola Solutions’ patents.

“Hytera is disappointed with this initial determination,” according to the Hytera Communications statement. “We will ask the [ITC] Commission to review and reverse this decision. We believe our products do not infringe our competitor’s asserted patents and will seek to demonstrate this to the Commission.

“Importantly, since the Commission has not issued its final decision, there is no ban on the importation or sale of any Hytera products. Furthermore, Hytera has developed new products, which Hytera also believes do not infringe any of the asserted patents and which we previously presented to the ITC for its consideration. We are confident our new products do not infringe our competitor’s asserted patents.

“Innovation is the core value of Hytera. We will continue to focus on providing innovative, high-quality, cost-effective, and reliable products and solutions for our dealers and customers here in the U.S., as we do around the world.”

On March 14, 2017, Motorola Solutions filed lawsuits against Hytera Communications, claiming that the China-based LMR manufacturer infringed on several Motorola Solutions patents in its development of digital DMR products that have claimed significant market share in the enterprise-communications space. Hytera gained access to the Motorola Solutions intellectual property in 2008, when it hired three former Motorola engineers who stole more than 7,000 computer files depicting the patented technologies prior to their resignation, according to Motorola’s lawsuit.

On March 29, 2017, Motorola Solutions filed a complaint regarding the alleged patent infringements with the ITC, which acts as an administrative body within the executive branch of the U.S. government.

With McNamara’s determination in place, the matter will be considered by the full U.S. International Trade Commission. ITC commissioners are expected to decide whether to review McNamara’s determination and/or make an alternative ruling—by Nov. 6.

If ITC commissioners decide not to review the determination, McNamara’s recommendation that Hytera be prohibited from importing and selling the identified DMR product would become the rule of law, subject to a potential presidential review by Trump. If the ITC commissioners do not review the case, the ruling could become effective much earlier than Nov. 6.

If ITC commissioners choose to review the case, they would consider McNamara’s recommendation and the evidence from the proceedings in the matter, but the commissioners are not bound by McNamara’s determination that Hytera should be prohibited from importing and/or selling products associated with the alleged patent infringement. ITC commissioners can reach a different finding than the administrative law judge, suggest a different remedy or return the case back to McNamara, according to multiple sources.

An ITC ruling that reverses McNamara’s findings would let Hytera Communications to continue selling its current product portfolio in the United States.

An ITC commission ruling against Hytera Communications that calls for the company to stop importing patent-infringing goods into the U.S. or being sold in the country typically would become effective with a few days of the ruling being announced.

Despite this effective date, the Hytera products theoretically could continue to be imported and sold in the U.S. during the 60-day presidential review. However, during this time, any sales could be subject to a bond—sometimes as much as 100% of the product’s value—that would be paid to the complainant, which is Motorola Solutions in this case. As a practical matter, such a bond often discourages the company that is being penalized from trying to sell infringing products in the U.S. during this time, according to a source familiar with ITC proceedings.

McNamara’s determination recommends the inclusion of such a bond, if the matter reaches the presidential-review stage.

Presidential reversal of an ITC commission ruling is rare, but Trump would have the right to do so, if he deemed it to be in the public interest. Some industry sources familiar with the situation have wondered whether the status of currently tense U.S.-China trade negotiations could impact considerations during a potential presidential review, but none of them indicated that they had any knowledge whether trade talks could be a factor in this case.

ITC commission rulings can be appealed to the Court of Appeals for the Federal Circuit, but the ban on patent-infringing goods usually remains in effect during the appeal process, unless the appeals court decides to grant a stay in the matter, according to a source familiar with ITC procedures.

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